Recognizing Pain Early for an Early Cure

Problems of Cold Stone Creamery have been paramount lately. Having worked with three CSC franchisees, I’m able to relate how their problems were resolved so that financial losses were minimized. Although I was never involved in negotiation with the CSC franchisor, the role my organization did play was significantly beneficial for the franchisees. Each was enabled to significantly reduce personal and business debt. What might  that mean for you?

Franchise owners are not unlike any other business entrepreneur: an owner must recognize the fragility of the risks of running a business . . . there always are problems that can be recognized and met. At the expense of being accused of using this forum to advertise, I can only respond that in almost 50 years of experience in providing solutions that work for businesses in trouble, the biggest mistakes I’ve seen are because a business owner denies, doesn’t know, or realizes too late that solutions exist that would have either saved his business or certainly would have reduced his losses.

Recognize that business problems multiply once cash flow decreases. With good cash flow the wonderful phrase exists: “He who has the gold makes the rules.” Once a business is aware of the dangers of being cash poor, an owner must start thinking about what he will do.  There are four places to go and each requires a conscious decision for execution:  1) business continuation,  2) business sale,  3) orderly yet profitable business liquidation, and 4) bankruptcy.

Achieving the selected course next requires an evaluation of which of six steps can best serve to attain the preferred objective.  Successful execution of these six is best served by employing an experienced strategist, one who will deploy the best effort to achieve an owner’s goal. The six steps are listed in descending order of preference of use:

Rehabilitation.  Business owners can save their businesses and pay their debts through extreme cost cutting, executed along with superior effort to garner profitable sale of goods or services.

Refinancing.  Business owners can seek new terms for loans, like lower payments, that can help up free up capital for their business. (Note: If seeking new funds, this adds more expense, interest.)

Seek new equity.  Businesses can exchange ownership for capital.

Debt resolution.  Owners can delay or attain a more satisfying settlement with their creditors. It is here that an Authoritative Third Party’s representation is most successful. Cash flow is increased, as debt is resolved.

Sale.  Owners can sell their business and use the money they make to pay off their debts.

Liquidation.  Owners can sell parts of their business, their whole business, or declare bankruptcy, which may sadly affect employees, owners and their spouses.

It is your responsibility to determine whether your situation is potentially perilous. Once recognized, early assistance and execution is the best assistance and execution. Denying the existence of financial problems is like denying the onset of an illness. Taking early steps to ward off pain makes for a healthier and quicker recovery. Help in achieving beneficial direction is available.

Jim Herst is the 1963 founder, now retired, of Performance Source Inc., Highland Park, IL, a business debt settlement service. For a confidential free consultation, call 800-883-5080 and ask for Steve Newman.